We own a small condo in a year-round resort town which we AirBnB and manage ourselves. We have found that by far the biggest challenge is to find cleaners. The area is so popular that blue-collar workers (cleaners, restaurant and resort workers, etc) simply can’t afford to live there, so there is a huge labor shortage. Other owners in our building have thrown in the towel and hired management companies solely since they bring their own cleaners (sometimes sponsored internationals, etc). However, the management services take such a huge cut (up to 50% in our area) that it’s nearly impossible to make a profit if you use one.
Conversely, any area with affordable housing and thus a decent labor supply is probably not a high-demand year-round vacation destination. It may have a peak season – summer beach destination or fall colors or whatever, but you won’t make any real money unless your place has year-round appeal.
Thus, I highly recommend researching the labor market and cleaners in the towns where you’re looking before you make the plunge. (Finding cleaners would likely be easier in PR, but you’d have to have a management company there anyway. There is no way you can effectively manage it from so far away without a management company.)
We have lucked out with a ‘unicorn’ cleaner so far and thus our AirBnB has been profitable, but I’m learning that it’s really hard to replicate. My general advice is to consider a STR as long as your goals are to subsidize a second home and hopefully cover your costs for an appreciating asset. It’s REALLY hard to make much of a profit.
Not to mention that it’s also a PITA. It’s my second part-time job now: most days it’s next to zero work, but it’s a huge hassle whenever something goes wrong (the battery on the thermostat dies so the AC doesn’t work, power outage from a huge storm on a big holiday weekend, the pool is down because a kid pooped in it, etc, all of which have happened.) I’m this close to turning it over to a property management company so that someone else takes care of all of it.
Then there may be security questions. We had friends who didn’t change keys on the vacation property for a few years and then extended family walked in on former cleaners helping themselves to the place.
We had a property management company manage our parents’ property. I wouldn’t say it was a nightmare, but when you added all the fees, plus maintenance etc, there was no profit worth mentioning. When I visited the properties, I was also quite upset about the condition of them, since the management company just appeared to be collecting rent checks and not actually monitoring the condition of the property.
A few years ago, we had to do extensive renovations to one of the units, and we lived far away from the property. One of my friends is quite handy, and he and his dad came in and did all the non-permit renovations at less than half the price of what the property management company quoted when they bid out the work. I trusted my friend, and he came through with flying colors. If we hadn’t had him and his dad, we would have run deeply in the red that year.
It’s doable to do what you want, but probably less so post-pandemic because of the labor shortage. Unless you have someone you really trust who can manage and watch every penny, I wouldn’t do it. The downsides are quite high. Maybe you won’t make a profit, but if it covers the mortgage when all expenses are factored in, perhaps that’s all you need (assuming you need to finance it, which is probably not a good idea given the current interest rates).
People do this all the time, obviously, but it really depends on your comfort level.
Tenants are very hard on properties, and short term tenants are hardest. You might want to outfit the property differently for rental than you otherwise would for yourself. Things like more durable, stain proof flooring rather than hardwood, paint colors that are easy to reapply and repair, etc.
If you want to leave your own personal items in the property when you are not there, you will want to have place where you can lock them away from access. Tenants like to explore every nook and cranny.
I’d recommend talking to a local realtor who helps people find short-term rentals like the ones you are considering buying to see what kind of cash flow you could predict. You’ll probably need to hire one for routine maintenance anyway, so you’ll want to get their rates and factor that in to your projected expenses. They will have to do more than a typical, year-round property manager would do, so expect to pay more. Run the numbers to make sure it works. Also, investor loans are very expensive right now, so consider what you can purchase with cash. Leveraging second homes is very risky and expensive.
Property depreciation is still a thing in the jurisdictions that I know, but in many places, you have to pay it back from proceeds when you sell. It’s a way to manage expenses while you own the property but not a way to make money.
That’s fine….but what happens when something in Puerto Rico breaks, and you are near the Great Lakes…and can’t get a quick flight there to fix it. It’s hard enough to get a person to do work…but if you don’t have a long-standing contract with them…it’s even harder.
Our friends don’t rent out their vacation homes…but they do let family members use the places. That’s it.
we had a beach cottage which we didn’t rent but did let other family members use for a time. I say a time, because we ended that option when other family members left it a mess (they were on vacation! They didn’t want to clean!) and on a couple of occasions didn’t leave when they were suppose to and we would arrive for our time and they (and their stuff) would still be there. Not ok.
remember that if you go through AIRBNB or VRBO you will be subject to being reviewed. We REALLY rely on those ratings/reviews when deciding a place. Some people may be lax in what they want/need in a rental but i think most others expect a lot. Amenities, cleanliness, nicely stocked with essentials. As we know, people don’t hesitate to rate badly even for a few things. And ratings are what drive your rentals.
we did a beautiful lakeside rental last year. Loved it. The owners used it part time and rented part time. This winter they reached out to their “best” renters from the last year or two and offered first dibs on rental time for this summer. I thought this was a great idea! It made us feel good to be in that “good renters” category and it allowed them to book guests who they had experience with and had treated their place well. So this year they will have to deal with fewer new renters.
if you are thinking of actually doing this, buy one first and try it out, not two. Two seems like A LOT with a third place also in play (? I think that’s what you said?) ONE at a time. All those comments above about things going wrong when you’re not there are absolutely real life. And when I’m renting I truly expect things to be resolved swiftly as possible. Not to mention things like the refrigerator conking out can happen when NO ONE is there! Surprise!, this is what you walk into when you’re coming to stay!
My parents were landlords for year and we also had second homes. Having someone local to manage the property is a must. You absolutely cannot do that long distance. Work that into your cost benefit analysis.
My dad’s condo on the Texas coast got hit hard by the hurricane a few years ago. His particular unit, on the first floor, didn’t receive much damage, but the roof had to be replaced. Building repairs were VERY expensive. The insurance company balked at paying so the condo association sued it. My dad finally got some money back, but he was out a lot. And of course, he lost a couple of years of rent so he had no income to cover the cost. There are just so many things that can go wrong, ugh.
Concur with all who mentioned having a caretaker/property manager in the area. This year, we had a pipe that burst in an upstairs bathroom. Our caretaker checks on all his properties every 2-3 days. That’s common practice for caretakers in this area because there are lots of vacation properties, which is why it’s not difficult to find a caretaker. Most tradespeople have a side gig caretaking summer properties.
Be prepared for unexpected events/expenses. The pipe problem (mentioned above) occurred because there were 2 days of sub-zero weather. This almost never happens in the area and it resulted in lots of pipes bursting.
I know multiple people that successfully self manage from afar. They hire personal assistants. Paying someone $25/hr occasionally is far better than giving up 25%+ to a management company. Plus, they get better service.
This is a bit more complicated than it may seem. AirBnB charges me 3%. For that, they handle the financial transaction, but far more importantly, they supply damage insurance. If you do direct booking you need a payment processor and more coverage than just liability. It’s hard to get that for less than 3%. You need it even if they guests have been vetted through their previous good behavior.
This is a huge point. STRs get abused. We’re building a house at the coast that will also be our 2nd STR. We’re designing it differently than we would if it was solely us staying in it for just that reason.
Our rental transaction was still through AIRBNB. (though it is a Canadian property). The owner just didn’t open up the summer bookings fully until reaching out to some families for week preference.
We rent in Ocean City NJ. The owners do use a rental company…but this company always reaches out to previous renters…first. I do not know if they are picky about who they choose…or not. We have been renting for 5 years from the same people. These folks have a cleaning service. We also pay damage insurance as part of our rental fee. I have no issue with that!
Our son will still be in PR, and that is one that will also definitely be with a management company, so between the two, that’s the one I worry about the least - except for hurricanes.
Thanks to everyone offering comments and experiences. So far, I still think it could work for us, though I really like the suggestion of trying one first, esp up north, since those are the ones I’m less sure about.
We are fortunate enough to have our three boys near enough to each property, and each will have contacts to take care of whatever. My dr son has the least time, but that’s the place where my cousin would happily help out.
Cleaners I’d need to line up.
We’d likely finance at least part of the cost(s) to do three places. Since it could be after FIL’s death, we’re unsure about that.
There are many reasons why this idea might not work for your family, but one alternative option would be to use the downpayment you’d be using for the rental property to help your kids buy slightly larger houses, with an in-law unit or ADU on the property. That way you could avoid thinking about the rental / maintenance aspect of things, you’d still have some autonomy from their lives while visiting, and they’d have room they could use to host friends or their siblings when you aren’t around.
If I did this - owned 3 homes for my own use and also as STR’s - I think I would feel too untethered. 4 months per year in each spot makes it hard to put down roots - harder to join any clubs or ongoing activities, etc. I would also think my sense of place would be compromised, because as others have mentioned you have to be careful about how the houses are furnished and stocked, and have your personal things (linens, clothes, treasures, toiletries, pantry staples) locked away when you leave. Just too much coming and going for my comfort, but - you may love the freedom of it. If it were me, I would seriously consider making one home my permanent home that is not rented out, that I don’t have to be careful with or “close up” each time I leave, and where treasures could be displayed and stored, mail received, etc. Establishing consistent medical care (and insurance) would also be a big factor. And what if one of you has a big illness that requires ongoing care and monitoring?
As a long-time weekly renter at the Jersey shore, and someone who has used AirBnb quite a bit, I have had the following things happen while renting that needed to be addressed - refrigerator malfunction, A/C malfunction, mouse in the kitchen, summer ant infestation. We’re pretty easygoing so we didn’t freak out about the mouse or ants, but with the other two we needed them to be fixed immediately for enjoyment of our vacation - so emergency response requested and required. The mouse/ants we took care of ourselves (after alerting the homeowner), but many other renters may refuse, and would certainly mention or complain about these things in an online review - and as was noted upthread, that can be killer to your rental bookings. And even though we are excellent tenants and leave the house in tip-top shape when we leave, we have still broken wine glasses (which we replaced but with something different), accidentally came home with things from the kitchen that weren’t ours (chip clips, a knife, etc.), and spilled things on furniture that we cleaned well but were impossible to entirely get out (we had a mustard bottle explode when opening once, and the mustard flew - some landing on the nearby couch.)
Also really consider what you would be asking of your sons. I was the unpaid “caretaker” of my parent’s primary residence for many years when they went snowbirding. It was a big ask. On the surface it seems fine, but constantly working in trips to their house and taking care of things (plants, snow removal etc.) while working full-time, and then later with small children, was not always as simple as it sounded. It was constantly top of mind - when can I get over to the house this week. And that was without having to deal with rental emergencies. The closer you are to your son’s residences or places of work, the better, if you are relying on them to maintain/manage your home and rentals for 8 months of the year - especially in the snowy winter months.
Obviously, there are people out there doing this and enduring the downside, and it sounds like you may be in a position to join them. You’re smart to be checking out all of this in advance. It’s important to fully understand what you’re signing up for. I, for one, didn’t!
My MIL has a mountain house about 2 hrs from our house and 2 hrs from her house (and our house and her house are also about 2 hrs from each other – it’s like a triangle). Since she and her partner are now in their 80s much of the care of the mountain house has fallen to my husband. He’s good with it, but they are backseat drivers and her partner is a builder/contractor so he likes to get his crew up there to repair major things.
Unfortunately his crew redid the roof a couple of years ago and it leaked. We went up there to open the house up for the spring season and walked in to moldy furniture and furnishings. We had to get a hotel for the night and then spent the rest of our “vacation” weekend cleaning. We were able to salvage most of the furniture and thankfully the walls are cedar paneled and didn’t mold, but it was a big hairy mess. MIL’s partner had his crew come and repair, but when my husband went up a few weekends ago (now 1 or 2 years later) he found another leak in the roof, so he’s got to talk to his mom and her partner about that and is not looking forward to it.
We have had pipes burst, plenty of mice, the occasional snake or other critter. The community well leaked one time and the house is in the low spot. That was a saga.
MIL doesn’t rent it, but does sometimes let other family and friends use it. The house is really weighing on her mind lately and she has made several comments about maybe selling it. She’s also talked about giving it to us in her will. I’m not sure what she will end up doing with it. I would be sad if we didn’t have it any more, but on the other hand it would free us up. It’s such a part of our kids’ childhoods, though. Lovely little spot with a creek and a meadow.
One thing that has helped is programmable thermostats and cameras that my husband can control from our home. If there’s a big cold snap coming he can log in and check how cold it is inside the house and he can adjust the temp remotely. The cameras can tell him if a stranger is coming up to the house and he can holler at 'em if he needs to (I don’t think he’s ever done that, but we have seen a neighbor taking a daily walk by quite often).
